Kenyan cable expected first

Johannesburg, 26 Sep 2008

Good financial backing and a simple ownership structure will give Teams (The East African Marine System) the lead in the race to land undersea cables in Africa.

This according to research published by research firm IDC, which says the initiative, spearheaded by the government of Kenya, "appears to have the fewest encumbrances, being mainly government-driven and enjoying a clear-cut ownership structure".

IDC East Africa regional director and author of the research Francis Hook says the same cannot be said for the planned Seacom cable or the East African Submarine Cable System (Eassy).

At the end of last year, Alcatel-Lucent signed a $79 million turnkey contract for Teams' 4 900km submarine cable network linking Kenya and the United Arab Emirates. The network is expected to be complete by June 2009.

The cable project started after the Kenyan government expressed frustration over the ownership structures proposed by the South African government for Eassy.

15 000km hurdles

The second cable expected to hit the shores is Seacom's 15 000km cable, linking Southern and East Africa, Europe and South Asia. The latest report from Seacom is that the cable is on track to go live, as planned, in June 2009.

The venture capital company is laying a 1.28Tbps cable and started shipping equipment to final destinations along the African East Coast, at the beginning of this month.

However, Hook says there may well be more hurdles for the planned cable than expected. "It has already altered its ownership structure to meet the requirements of the South African government, which recently indicated that cables placed in SA must have at least 65% South African or African ownership."

He says it is still unclear what regulatory issues may be raised in the other countries in which it plans to lay cables (Mozambique, Madagascar, Tanzania, and Kenya), especially in countries that have dominant government-owned operators that are signatories to Eassy.

No Eassy going

Eassy is expected to have the toughest race to the finish line, with a total of 16 direct investors, including SA's second national operator, Neotel. It will land in SA, Mozambique, Madagascar, Comoros, Tanzania, Kenya, Somalia, Djibouti, and Sudan.

"Eassy's more complicated shareholding structure forces the project to adhere to open-access principles rather than to a pure profit motive," says Hook. Eassy is only expected to provide a commercial service from the second quarter of 2010.

The $265 million cable is also the cable with the lowest capacity expectation, with the capacity provision of 640GB.

Africa's challenge in a global business market remains the lack of access to broadband, which the IDC says will be alleviated by these cables. However, the firm says Africa must start preparing for a flood of bandwidth when these cables land.